GOP presidential frontrunner Mitt Romney has taken heat for President Obama and homeowner advocates for saying that foreclosures should be allowed to run their course free of government intervention.Lately, however, Romney has changed course on the foreclosure crisis, a topic that rarely gets much treatment on the campaign trail as it is.
Beginning with his victory speech after the Michigan primary last month, Romney has been critical of President Obama for not doing more to tackle foreclosures during his first term, especially when he had a super-majority in the Senate earlier in his presidency.
“We need those banks to be willing to renegotiate with people who are underwater in their homes to make sure people can stay in their homes,” Romney said March 3 at a campaign event in Dayton, Ohio. “If you have someone who has an income and can meet payments that are a little lower than their current mortgage, then work with them, renegotiate, don’t put the home into foreclosure if those people are able to stay in the home and meet those obligations.”
However, Romney had taken quite a different approach on the issue over the last few months. In October, he told the Las Vegas Review-Journal newspaper that government should stay out of the foreclosure crisis, making a statement that would define his position on the issue, at least until now
“Don’t try to stop the foreclosure process. Let it run its course and hit the bottom,” Romney said then.
The former Massachusetts governor’s new direction on foreclosures, pushing for banks to re-negotiate with homeowners, has been at the heart of the Obama Administration’s attempts to stem the tide of foreclosures.
Obama has been pushing for the biggest lenders to reduce mortgage payments, and to even lesser success, to reduce mortgage principals for desperate borrowers facing foreclosure.
The most prominent of such campaigns, the Home Affordable Modification Program (HAMP), was launched in 2009 with the goal of assisting 3 million to 4 million borrowers.
HAMP has started 951,319 permanent mortgage modifications, but about 768,773 remain active through the end of 2011, according to the latest figures released by the administration. More than 946,000 attempts at reducing monthly payments have been cancelled through December.
Administration officials have been forced to withhold incentives for the biggest lenders, including JPMorgan Chase and Bank of America, for failing to meet HAMP policies, including deficiencies in identifying and contacting homeowners; homeowner evaluations and overall assistance; and program reporting, management and governance.
More recently, Obama has proposed bigger incentives for lenders to reduce mortgage balances – believed to be the most effective foreclosure-prevention strategy by housing market analysts. U.S. officials have also offered incentives for Fannie Mae and Freddie Mac to forgive mortgage principals in excess of the value of a borrower’s home, so-called ‘underwater’ mortgages.
But Fannie and Freddie’s regulator has resisted, claiming the cost to taxpayers would outweigh any benefits from mortgage write-downs. Both Fannie and Freddie have been wards of the government since 2008 and are subsidized by Treasury bailouts – more than $170 billion in taxpayer funds so far.
Despite Romney’s claim, Obama persists in finding ways to assist desperate borrowers into assisted refinancing or some form of mortgage reductions.
The president this week announced yet a new plan. This one would to cut refinancing fees for any government-backed mortgage through the Federal Housing Administration (FH), along with new protections for service members harmed by “unscrupulous” banks and lenders.
During his press conference, Obama took a shot at Romney’s previously stated, hands-off approach to the crisis.
“I’m not one of those people who think we should sit by until the housing market hits bottom,” Obama said.
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